Best Path to Hedge Funds ? (S&T or I-Banking)
Hello,
I am currently an intern at Morgan Stanley in their Institutional Equities Division , and my goal one day is to start a hedge fund or get into the hedge fund industry. What is the best career path towards hedge funds , S&T in any product area or I-Banking in M&A or specific coverage group?
........ or equity research?.......asset management?............ definitely interested in this answer
From the equities side of S&T you want to get into a seat where you're taking risk, Because as a hedge fund manager that is how you make your living. This also allows you to compile a PnL. You will see that many of todays most successful hedge fund managers came from some type of proprietary or arbitrage desk. Very few times do you see an equity sales-trader going out and raising money for a HF. Most sell-side firms have a group that is either an outright proprietary desk, or the flow desks are given the ability to take on a small prop book based on their views of the market. Take my opinion with a grain of salt as I only have a summer of experience at a L/S equities fund and a BB S&T.
i mean you can definitely do it from IB. im doing re private eq, hopefully I can get in as well.
but to be honest, the best from undergrad is IB M&A (or some sort of product group, not industry)
or
S&T
or
equity research
or
join an asset management (specifically fall into their investment management, NOT private bank/ PWM) arm of a large BB and hopefully move your way in like I want to.
You can start a fund with any background, it is the style of fund that is dependent on your experience. It might be easier with an S&T background, assuming you are good, because you can show investors your PnL. Sell side guys won't have that ability, although I seriously doubt they'd try to raise a fund with no buy side experience.
x
Path to Hedge Fund: start out in investment banking or equity research? (Originally Posted: 12/10/2015)
I know this has been discussed at length. From skimming search results, it seems that while ER is a natural transition to a L/S shop, investment bankers receive preferential treatment from headhunters because they typically have more rigorous experience.
Can anyone currently at a hedge fund shed light on to what extent this is true? Is it really that much harder for a BB ER guy to move to a hedge fund than an BB investment banker?
For people who have jumped from ER to HF, what kind of hedge fund are you at (l/s equity or otherwise)? How much useful modeling experience did you receive during your ER stint? Some people say banking gives better modeling experience and that ER is mostly updating shit as a junior associate.
Just wondering. I'd appreciate any insight. Thanks.
many HF have equity research analysts....
You answered your own question. Go for ibanking.
I got some good BB ER SA offers though, and nothing from IBD
bump
Hedge Fund Career and Path ! (Originally Posted: 10/21/2015)
Hi I'm Samuel , I'm 17 years old and currently attend high school as a senior. I was wondering if there are any hedge fund managers or analysts out there that might be able to help guide me to becoming apart of hedge funds in general. I recently just got into trading , finance , and just business in general. I want to know what majors , schools , or requirements are needed to be even considered for hedge funds? What do hedge funds do exactly and how hard is it working or being apart of one? Thank you and i appreciate any comment , advice , or feedback ! (Sorry i'm a lost sheep but i'm interested and there's so much to learn)
Read around kid, this whole post has been answered to death before.
That is the whole point of a forum, it is a centralized repository of accumulated knowledge.
Read "More Money Than God" for an overview / history. Search the boards for everything else.
Are you at a target high school? If not it's already too late son.
Jeez... when I was 17, my delusional ass still wanted to be a doctor...I didn't even know what a hedge fund was.
Major: 1) Accounting, 2) Economics and 3) Finance...in that order. My biggest regret in college was majoring in finance rather than accounting.
School: Target. It certainly is possible to get a job/internship at a HF if you don't have an Ivy League degree (like me), but its considerably harder.
Requirements: Do LOTS of work outside of school. Read as many investment books/investor presentations as you can. Analyze stocks during nights/weekends. Network with as many HF managers as you can. Try to get an internship. For me, I sacrificed my social life to learn about investing. I went to a bar 3 times my junior and senior year and I was writing an investment thesis on my 21st birthday. Not saying you have to make the same sacrifices I did, in fact I don't recommend it, but my point is that breaking into this industry requires a lot more than "hard work" and "willingness to learn" especially at the undergrad level. HFs want you to begin performing at a high level your very first day.
What does a HF do: Loaded question. Simple answer is using an investment strategy to mitigate risk. When the market goes up...you go up...when the market goes down...you don't lose much money. We are a lot less regulated relative to mutual funds and we take a performance fee :). Hence why only qualified investors can invest in a HF.
How is working at a HF: Depends on the fund's strategy. I work at a L/S shop with a very concentrated portfolio so my workload isn't bad and there's no pressure on me to find new investment ideas every day. Best way to sum up work at my shop - fun, intellectual, relaxed most of the time, but very stressful during quarterly season. Its the polar opposite at a multi-strategy shop like Citadel, where the stress is constant and the bottom 10% of teams get cut each year.
Have any of you went from a non-finance path and broken into a hedge fund? Something like this...? (Originally Posted: 02/08/2016)
The reason I ask was I was reading about that pharma guy (who raised the price of the AIDS drug) on wikipedia:
"Shkreli dropped out before his senior year [of Hunter College High School] due to lack of interest, but received the credits necessary for his diploma through a program that placed him in an internship at the Wall Street hedge fund Cramer, Berkowitz and Company when he was 17. After four years as an associate at Cramer Berkowitz, Shkreli worked as an analyst for Intrepid Capital Management and UBS Wealth Management.He then started his first hedge fund, Elea Capital Management, in 2006"
Is there something like this where a HF would take a chance on someone in their mid-20's (out of school, already in a career)? I know it's rare, but how did it happen for some of you (or people you may know)?
gotta have family/social connections
If your goal is to eventually become a scam artist who screws a bunch of your investors out of money to pay off previous investors that you screwed out of money and be a psychotic asshole, yes, people will allow you to do that.
I'd take anything the guy says with a lick of salt and a shot of tequila. I have a good friend who's in the HC HF world and he said anyone real has known the guy's a con artist tool for years. And a piker at that.
Thanks for the interesting insight.
So you think the SEC's allegations are legitimate, rather than something that was falsely concocted due to the pharma stuff?
I've seen it happen, but it's rare, big names guys tend to do this on a one off basis - Bill Ackman for example:
http://www.forbes.com/sites/monteburke/2012/06/29/the-fishing-guide-who…
Search for "axovant ramaswamy"...
Best Path to Hedge Fund Career (Originally Posted: 10/28/2013)
Your ultimate goal: Become a Hedge Fund Portfolio Manager ASAP! Get RICH! and Retire EARLY!
Right out of undergrad, which opportunity would you take between the two options available? - BB Investment Banking - Large Asset Manager PM Group
:(
Step 1: Borrow $100,000 from friends and family Step 2: Create Hedge Fund Step 3: ?? Step 4: Profit
well, yes if you know you can make good returns in the long run. but not everyone is a born genius to succeed without the proper training and necessary experience.
I wanna be the very best Like no one ever was To make money is my real test To models and bottles is my cause
I will travel across the land Searching far and wide Each Gunner to understand The power that's inside
Gunner, its you and me I know it?s my destiny Gunner, oh, you're my best friend In a world we must defend
thought you were gonna start the Pokemon song
Love it
Just tap that Large Asset Manager PM on the shoulder and whisper him "I'll take it from here".
Tap on Steve Cohen on the shoulder and whisper him "I'll take it from here".
4a. use connections to boot board members 6. say finance blows and go back to fishing
Some of the hedge funds will specifically target those at top tier BB IBs.
ah balls, nobody else could expand upon the Ackman references?
Questions about the path to becoming an HF PM (Originally Posted: 07/15/2011)
Hello, this is my first post on these forums, although I have been reading them for quite a while now, I've read most of the stuff on the hedge fund forum, I especially enjoyed reading that 20 page thread about the good, the bad, and the ugly about hedge funds, very informative. But anyways, I still have some questions about the HF industry.
A quick background about myself, I am currently 18, and will be starting starting college at Wharton in the fall. Also, if it matters for anything, my family is not super wealthy, so my parents don't have any connections or anything like that. I am not 100% confident that hedge funds/finance is something I want to do with my life, but it is definitely a major option.
So obviously becoming a PM is one of my possible goals, with the dream of running an HF one day, obviously I realize that the percentage chance of accomplishing that is low, but I can still dream.
My questions currently are:
What should I do my freshman summer, just work a summer job, or try to land some kind of internship? I've heard that without connections an internship is very hard, so that might not be possible for me.
What about Sophomore summer?
Is it possible to land an HF internship my junior summer?
Is there a major benefit to having a minor or second degree in engineering, like comp sci, even if I don't want to work in a quant heavy fund?
Just recently, I set up a small Scottrade account with some graduation gift money. I have been reading a bunch of books that I have heard mentioned on these forums, all of them value investment books, so far I've gotten through, Intelligent Investor, You can be a stock market genius, Margin of Safety, skimmed through Security Analysis (such an old book though), and read one up on wall street. I am trying to learn this skill of value investing, and have been reading financial statements and trying to find opportunities.
I guess my question is, should I be spending my time on this? its not like it consumes my day, but I don't want to start forming bad habits or something and then be screwed later on. I've been reading and doing this project because it interests me, but again, for the sake of my future career, I don't mind stopping.
Anyways, sorry for the rather long post, but I just wanted to put that out there. Also, I've seen that people can be rather ruthless on these forums with their responses, so try to take it easy on a guy.
i could give you a huge long post, but I suggest you just go on linkedin and check for HF managers, then see what paths they took
Get as much work experience as possible before you graduate, the reality of most jobs will be different to your external perception, you want to make the most informed decision possible when you eventually accept a graduate position.
Dont be too concerned with deciding early on what stream of finance you want to go into. As you get older, fit and culture of the firm/people you work for will become increasingly important.
A second degree is absolutely of benefit especially in technical fields. It will differentiate you by allowing you to specialize in an industry group if you so choose.
Its tough to make any money on a retail brokerage account when your portfolio is small, as fees will eat alot of your profits. What having the account will do is enable you to demonstrate an interest in the industry to prospective employers, get you thinking analytically and get you reading financial statements.
Relax, you will figure it out. A career isnt a sprint its a marathon (although the wannabe bankers might disagree with me).
It sounds like you're more interested in the valuation-driven game rather than macro stuff. Most funds that require you to look at a balance sheet will be looking for an IBD background. While I wouldn't close any doors at this point, you sould probably get on the IB track which shouldn't be too hard at Wharton. PWM next Summer, boutique IB the next, SA at a BB after junior year and FT glory the next. There's obviously room to do other things than that but that seems to be the template for your average value/event-driven analyst.
The way you can differentiate yourself from other analysts is actually having good trades to pitch, which the Good Bad and Ugly thread discusses in detail.
Quant PM here.
First off, enjoy your college time. Being able to communicate well, make friends easily, and have "good times" socially are all very important parts of succeeding professionally. That said, it's important to do well academically and plan for your future. (You are clearly a bit precocious, so the latter shouldn't be too hard for you.)
Don't worry about not having family connections. It's never been easier to network/been more acceptable to be a social whore; your generation is fortunate is this regard.
My $0.02: find mentors you like; focus on increasing your own competency and becoming a good team player. If you're likeable, hard-working and competent, it will work out for you in the long run.
Thanks for the comments guys, I gather that I should just plug along and make the most of the opportunities that come my way. That's kinda what I figured, but just wanted to see if there were any pieces to the puzzle that I am missing.
@GoodBread, so if I do realize that my interests lie in the Value/Special Situations area in the future, does that mean the possibility of working at an HF right out of undergrad goes down, as opposed to a macro/quant fund? Or is it more just about the connections I am able to make and the impression I leave on people during interviews and such.
On a side note about showing initiative, is it worth joining investment clubs in college to "show initiative", I've read mixed reviews about the worth of doing the clubs in order to gain an edge with future employers.
It's definitely possible to intern at value-oriented HFs your freshman or sophomore year. You might not be doing any mindblowing work, but if you have some balance sheet knowledge and the proper framework, you might get bits and pieces of good work. Get your foot in the door and once you start your internship, show your manager that you're competent enough to do more higher level work and that will gradually get you to where you want to be.
I've seen Wharton kids do HF/banking internships freshman and sophomore year. You guys definitely have a leg up on getting solid internships and have alumni everywhere. Just get your name out there and meet people.
You won't really be closing yourself off to other opportunities if you intern in IBD as a junior. That being said, when you're looking for a FT offer, being targeted when approaching buyside firms makes sense. It's fine not to know what you're interested in when you're starting college but people expect their analysts to have a deep appreciation for the strategy. The skills you build in IBD are very relevant to value funds, much less so to macro funds.
Being at Wharton, if you're sufficiently persistent with coldcalls and cold emails to boutique funds it shouldn't be too hard to land something, even after freshman year.
Thats good to know, it would be awesome to intern at a small HF right after freshman year, one to learn, and two to see if its something I want to pursue. Will Wharton have the resources to track down these small boutique firms, or do I have to really hunt them down myself?
I would be 90% sure that Wharton has a career website for all students, and at least a decent portion of internship listings will be for HFs.
Definitely use the resources at your disposal, but i went to similar level school and they were insufficient. When I did the cold email thing successfully (for a school year internship rather than frosh summer, but still), I just bit the bullet and was lazy and bought the biws networking guide for the comprehensive list of pe/banks/funds. Sent about 100 emails, got about 5 responses and an offer for something in short order.
What can I do as an undergrad to break into a hedge fund upon graduation instead of taking the investment banking route first? (Originally Posted: 06/26/2012)
What can I do as an undergrad to break into a hedge fund upon graduation instead of taking the investment banking route first?
You can start by not asking these types of questions.
Hardly any hedge funds have proper grad recruitment schemes, it's all about networking. I only have experience of London though, it happens very rarely here. I've noticed a lot more undergrads/grads in NYC with HF experience so it could be different.
It has to be said though that the training isn't as comprehensive if you go straight in after graduation.
Bridgewater recruits at Yale
We're starting a hedge fund portion for our company...what're your qualifications...in shape? stern disciplinarian? enjoy working with children?
Search bar works wonders, no?
It's not impossible, you just have to dig through your school's recruiting system throughout the year but you'll be lucky to find it. My advice is to out-prepare your entire class by showing interest in the hedge fund industry, and when time comes for the interview you can demonstrate how you are the best person for the position.
A few local hedge funds recruit at USC.
You know what you could do? You could be do your own research and find the answer yourself?
Start your own Hedge Fund.
Edit: omg, can't believe I'm the first one to write this... You guys are getting slow.
Judging by the lack of independent research skills you're showing right now I'm not sure that would be such a good idea for you...
What if he was the next Ken Griffin... But now he is going to be at Walmart...
Yes, I do need to find out more of this on my own. Thanks.
Yea...you do
Don't listen to these troll....
I did it right out of college with an Engineering degree.
Anyways I'd follow Redrooms advice and be the #1 (by far) with respect to your class. Furthermore, having a combination of intellectual prowess, quantitative rigor, some sort of programming experience, charm and a large network (that will actually help you - not just the number of people you know on FB/Linkedin) will be essential.
It wont be easy but with a bit of luck you can do it!
Okay, well with an investment banking and private equity internship under my belt, will it be significantly easier? I interned at a small buyout fund last fall (after I wrote this post) and am about to begin a summer internship at small investment bank (70% of rev comes from sell-side assignments).
Will that experience (modeling, writing, research), along with "investment banking" and "private equity" help? Why or why not?
Also, regarding your emphasis on relationships (that will actually help me), I have built a lot of private equity and investment banking relationships (probably around 120 people across both fields) but only know 2 hedge fund people. What kind of relationships are you talking about? ER analyst (HF relationships? Some color on this would help...
.
Route to Hedge Fund - Becoming a hedge fund portfolio manager (Originally Posted: 03/11/2007)
So how do i become a hedge fund portfolio manager?? start as an IB??
ask urself how do u bang a model? attack it the same way
so you abduct the hedge fund manager, tie him up, bring him to your home and have your way with him?
My rec would be start in Asset Management. Ibanking has little to do with hedge funds. HF's are asset management, like mutual funds. Except hedge funds are wayyyyy cooler and more profitable.
Easier to get to hf from ibanking than from Asset Management in my opinion.
I think you should probably be worrying about how to get your first job, let alone becoming a PM...
Cart WAY WAY WAY ahead of the horse...
IB or ER to eventually get into an HF?
thx
Probably ER. Although IB would give you solid networking.
I don't think there is a good answer.
with ER, I sit all day and talk to hedgies. Pretty decent network plus the quant skills.
S&T is not good path to HF?
If you want to work for a high-frequency trading shop, S&T is the right place to start, not IB. You don't see RenTec, SAC Capital, Citadel, etc. hiring investment bankers, because they are useless in trading shops.
If, however, you want to work a place where you do a ton of fundamental analysis for each trade, IB is the right place to start.
There are lots of funds using both styles successfully. Figure out what you like, and go that route.
thanks, that clears it up a ton
dang so im a newbie to the terms; wats ER and S&T??
dang so im a newbie to the terms; wats ER and S&T??
ER is equity research, S&T is sales and trading.
thx
actually, most trading shops still need analysts that'll perform fundamental research, SAC has analysts performing fundamental analysis... most PM think that IB experience is the best way to prepare for a hedge fund career...
Sry for bumping old thread, but how profitable is ER compared to IB?
What's the traditional path of getting into a hedge fund? (Originally Posted: 05/10/2014)
I'm interested in going into investment banking as an associate (post-MBA). After that, how do you get the hedge fund job?
You don't... The vast majority of the people who make the switch do it pre-MBA. Some might be able to get a HF job coming out of an MBA, but that's if you're doing it at H/S (maaybe W) and have pre-MBA experience at a top tier IB or AM firm (possibly ER, that's even more rare though). Non-financial back-ground -> non-Harvard/Stanford MBA -> IB associate -> Hedge Fund is so rare that you probably have a better chance if you start a fund yourself.
Plenty of smaller funds might be interested however.
OP, this probably won't happen. That track, is very unlikely as it is so: analyst -> MBA -> associate -> HF.
The whole point of HFs scooping up analysts is because they've gained a shitload of technical knowledge being in an M&A/LevFin group or covering an industry. The move as an associate after being an analyst is hard because headhunters come for the analysts...
What did you do before your MBA? It's not unheard of technology guys (VC/corporate development roles) getting into places like SilverLake for example. I know in London this year (can't comment on the US) there's been many associates scooped up by Apollo, BX, Oaktree, etc. for the credit teams.
This website is full of misinformation and people who have no idea what the fuck is going on. You want to know who is making it into hedge funds these days? H/S/Y/P school guys. Want to know who else is making it in and making the jump to trader? Software Engineers and Data Scientists. M & A is old school bullshit. It's all about tech. Go learn big data. Learn distributed computing. Learn Machine Learning and Map Reduce over massive data sets. Bridgewater Associates is literally dumping money into big data warehouses, with PHD economists standing by as big data engineer's build the systems that are doing macro level analysis on world economies. There now you know.
You seem objective. It's funny because all the analysts getting recruited at L/S and distressed funds are all data scientists too without any accounting/modeling knowledge at all. Just because they're H/S/Y/P they get hired.
Also, you mention ONE fund only as your example, a fund who has neither performed well during the past 3 years nor is it notorious for hiring the best analysts (2-3 people make the investment decisions).
Do yourself a favour and be quiet...
OP, what this guy is saying is 100% true for macro, event driven, top down funds. if you want a fundamental, bottom up, traditional L/S or even distressed debt (a la Oaktree, not HF but still), you'll need financial knowledge. Pretty sure Seth Klarman doesn't care about distributed computing when he's bargain hunting.
OP, aren't you the same guy that wanted a guaranteed MBB offer post-MBA? There's a lot of doors that open up at the top schools, but usually they will not all open for you simultaneously. You're going to have to pick a course and stick to it...
Also agree that MBA-->banking assoc--> HF is not a common path. Much better odds jumping to a smaller hedge fund or AM out of b-school and trying to ladder up to something more sizable after you get a few years in.
this thread is shit
Macro/big data funds and traditional fundamental funds both have their place/edge. Without the fundamental investors anchoring a company's performance to its results, you would have a bunch of computers and statisticians determining the values of these companies without little care of its operations, management, investments, acquisitions, and performance.
Better path to get into a HF? (Originally Posted: 07/26/2013)
Investment Banking or Equity Research? Both out of undergrad
Ibd
It's not really logical, but, yes, headhunters are much more receptive to IBD candidates.
Best path to hedge fund PM with foucs on energy? (Originally Posted: 10/06/2011)
This is still a bit premature, but I'm thinking about how to articulate my short and long-term career goals for my b-school essays next year. So my ultimate goal is to work as a portfolio manager at a large hedge fund, focusing on energy stocks.
To achieve this goal, is it better to do equity research at a major investment management firm or do natural resources banking at a BB? I noticed from looking at linkedin profiles that very few people at the big IM shops transition into hedge funds.
Either via industry itself (BP, Shell in-house research group), McKinsey/Booz Energy team (top 2 in the field), or boutique energy-focused IM firms. Energy-related banking is mostly all in Houston or Chicago
the guys in know did ER for a BB
Route to HF (Originally Posted: 03/06/2010)
What is the usual route to HF?
Is it Undergrad->IBD->HF Or is it Undergrad->HF
Someone correct me if I am wrong, but except for a few special circumstances isn't it always better to do a couple years in IB and then go HF because of the formalized training and acquired skill sets that you get while in IB?
I agree that the first one is better for the skill set. But is it common that ppl go directly from undergrad to HF? More importantly, how possible is it?
It seems to me that hedge funds which recruit from undergrad are for more quantitative roles like Citadel/DE Shaw.
ER>>>IBD for hedge funds. IBD has very little to with with L/S equity funds. Not that it can't be done but not as natural a move.
Resaerch or Trading->HF
how hard would it be to go directly from undergrad to HF?
A hedge fund has to be enormous to bother hiring an undergrad as you would add little value and take up time teaching you things. As someone mentioned only Citadel/DE Shaw and maybe some other quant funds consistently hire undergrads and they are really just looking for quants. It just doesn't make sense to hire an undergrad to pick stocks as actual investing has very little to do with anything you learn in school.
http://www.wallstreetoasis.com/forums/best-way-into-a-hedge-fund
Is there any path to a Hedge Fund anymore? Banking analyst? Only from BB M&A? (Originally Posted: 10/24/2011)
Hey Guys,
Based on from what everyone is seeing, is there anyway to set yourself up to enter a hedge fund? Aside from doing M&A at a BB, is it realistic to get into a HF as an analyst from a boutique, or a place like Macquarie as an Analyst?
Thanks.
Top MBA and/or CFA, or relevant ER experience with a top rated BB team or with an independent firm focused on fundamentals is often a solid path from what I've heard, but take my advice with a grain of salt, because I'm only partially along that path myself.
Route to Hedge Fund - Currently in my last year (Originally Posted: 02/27/2013)
Dear All,
I am currently in my last year at University in the UK and applying for Graduate jobs. I completed an internship within GIR at GS and was subsequently offered a full time role. I also however have a couple of buy - side options on the table. One at a well know house within the Fixed Income Investment Team
My aim is to work within Multi - Strategy/Macro Hedge Fund and was wondering which position to take? Will the Sell - side experience be usefull? Or will the buy - Side job place me better for my aims?
I intend to only complete the graduae scheme and move on afterwards.
Tough man. I would take GIR for HF as a whole but the Fixed income one would probably be better for you for Macro
Thanks for the reply.
The Goldmans role is within ECS, so it is Macro based work
Anyone else?
Best route to break into HF (Originally Posted: 04/01/2007)
We've discussed this ad nauseam in the banking forum, but I just wanted to get some additional input. How easy is it for a banker to break into the HF world as opposed to S/T or PWM folk?
Obviously, PE loves bankers, do HF as well?
If you want to work for a high-frequency trading shop, S&T is the right place to start, not IB. You don't see RenTec, SAC Capital, Citadel, etc. hiring investment bankers, because they are useless in trading shops.
If, however, you want to work a place where you do a ton of fundamental analysis for each trade, IB is the right place to start.
There are lots of funds using both styles successfully. Figure out what you like, and go that route.
Yeah but if you go to a good IB, get into a good MBA and focus on trading/math there's no reason you can't switch over.
And if you work at McKinsey and get a good MBA, you can work in banking afterward. But if you want to work in banking, go work in banking; don't work at McKinsey.
Similarly, if you want to work at a trading HF, don't waste your time in IB.
Most Common Career Path into HF (Originally Posted: 02/11/2014)
I know there is no standard path and no standard HF. What do you think is more common for HFs that focus on long/short? i.e. IB > HF, Asset Management/ER > HF, IB > B school > HF
Those are supposed to be arrows..
Can people please search for this answer? It's asked at least once every two weeks or so.
Most common? IB to HF. Can it be done and is it often done a multitude of other ways? Yes.
Im going to tell you what you want to hear: Equities AM to HF is the BEST path.
I can't tell you the MOST common way into HFs, but there are plenty of banking analysts who go into hedge funds
IB-PE-HF while many go to bschool between PE and HF. To your question re IB-bschool-HF, it happens, but much harder than IB-PE-bschool b/c of competition from people in bschool who have PE/buyside experience
Key point about the paths above: people who start in banking are most successful (perhaps most interested) in fundamental long/short equity positions. Doesn't mean event driven, credit/distressed, global macro, or quant are not possible, but far less common - with global macro and quant as the least common in my experience
Thus, would start considering what investing strategy you want to target if you want to eventually work for a HF
I'd correct that and say most GO INTO L/S funds, just b/c it's much more easier for them to justify buys/sells than at a credit fund.
Might be worth thinking in simpler terms - e.g. many go to L/S funds since it's the most common HF strategy out there.
I know you know how to search this forum.
Fastest is by far ib-->hf other combinations involving IB/pe/hf work but wastes a lot of years doing tangentially related stuff at best
It's crazy how much focus there is on L/S on this site. Personally find it to be the least interesting but hey, to each his own.
Changing Career paths to hedge fund (Originally Posted: 06/05/2013)
Hi everyone, I am looking to break into the hedge fund industry. I went to a target school (Cornell) and majored in Math & Comp Sci. My focus was applied math (relative to most math majors I knew, I was pretty light on theory and took applied math type electives instead). GPA was around a 4.1 because I got some A+ grades (which are 4.3), but if you count A+ grades as just 4.0, it was about a 3.9. Anyway, I graduated a few years ago and have been working in software engineering at a well known software company. I've realized that the work isn't that stimulating for me. The pay is solid, but earning more is always nice and logically I would expect a finance position to pay better than a regular tech position assuming they require equal skill. Plus, even with my skill set I am basically just a "code monkey;" not that the work I do doesn't require thought, but I'm coding a ton whereas the work isn't highly mathematical in nature, so I do think my mathematical talents aren't being utilized. As a quant there would be more than enough math to satisfy me I'm sure.
My questions: Am I correct in assuming that a good hedge fund job would pay more than a good tech job? I don't think I'm going to get into DE Shaw (who I've heard pay really well) but do most other hedge funds pay well too? Are there good opportunities for advancement? Are there any good hedge funds near the Silicon Valley (I currently work there and for what it's worth I love the area) or would I have to relocate to get the well-paying ones? Would I have to work my way up from a "traditional" grunt work-like entry-level IB job? If that's the case I have no interest in it since I would prefer the work I'm doing now to that. How much does it hurt my chances that I know literally nothing about finance? I have a bit of money in the stock market and took freshman econ. That's literally it. I could read up some on the internet, but I'm not going to pretend that I have any experience. Does the industry generally look down on career changers and prefer hiring people fresh out of college? Should I get a graduate degree in financial engineering or something?
If you're at a big software company, you'll get paid well but have very limited upside in the long run. At a startup, the potential (and risk) is higher.
Your background is strong, and you can apply to top quant funds. Few people come in with the trifecta of quant skills: finance, programming, and math/stat. It's standard to come in as a quant developer and be promoted into research/trading/PM. You have a strong background for this; finance skills are the easiest of the three to acquire.
HF Career Path (Originally Posted: 08/31/2010)
I am starting my freshman year in september and want to pursue a HF career, specifically one as a portfolio manager lol. My school has an internship program that gives us a work opportunity every year, and in different seasons, the only downside is that is semi-target. I will be studying math/business in a double degree.
As there are many people on the forum who have already been through the different processes, what would you recommend my plan to be for the next.. several years or so?
I dont know whether I should go for ib, ER, s&t, or a hf internship (assuming I am able to get into any of those). Some people might say to get some sort of non-hf experience, get an mba, then go to a hf. Others might say intern at a hf, network and write the CFA. Enlighten me on your opinion, wso members. :) keep in mind I have aspirations of being a portfolio manager too XD
search function?
Umm, first you need to worry about getting a job as a TA at a trading firm or BB before we can start talking about hedge funds. And before that, you need to get good grades.
For the next two years, your mantra needs to be, "I'm going to be the hardest working student out there and learn as much as I can about how the markets work. I'm going to be one of the best students in my probability and differential equations courses."
Keep repeating that mantra, and in two years, maybe you'll get a good internship at a trading firm. In seven or eight years, we can talk about you getting a "HF Career Path."
And stop using lol and emoticons
I just wonder how a freshly minted high school student can start thinking about these different career paths while pigeonholing himself or herself. Do you even know the differences among these career paths, let alone the different skill sets required? For all I know, you may not even be the right fit for finance as a whole. I strongly suggest going into colleg with an open mind, getting a broad education and doing well (yes, this is a universal requirement and the only thing you should be concerned with at this juncture.)
awp: I wanted a more fitted answer.
IlliniProgrammer: thank you that struck deep. I'm actually gonna write your post down on a sticky :P
rjroberts1: meh, eventually..
knasr: My program gives me a huge amount of flexibility and I am open to new ideas, but having a career focus or at least thinking of one gives me something to strive for. I can see where you are coming from though.
Get good grades, get drunk and fuck as many bitches as possible.
Path to Distressed Hedge Funds (Originally Posted: 02/25/2009)
I posted this to the restructuring group, but then realized others may have good insights as well...Searching the bios of distressed funds, one tends to find a few common backgrounds:
Standard IB Restructuring IB Law HY research/trading
Many folks would love to land at a place like SilverPoint or Highland, but assuming they can't get an offer, which of the above options is best? Do folks in bank restructuring groups (HLHZ, Miller Buckfire) generally have an easy time joining a fund after a few years? Easier than someone in general IBD at, say, Lazard? How about HY research?
If you are referring to Highland from Dallas, they are on their way out...
Inside word: Highland is imploding. Not just funds, but the management co.
Really? That sucks. I prefer Texas to NYC and I thought they were big, experienced, and legit.
id say restructuring IB at a top shop is the easiest way in
Do you consider HLHZ and Miller Buckfire top shops, or are you talking tippy-top like Lazard and Blackstone?
I mean its all relative. Both places are going to provide you a great experience and at the end of the day it is still up to you to see your experience...I have seen some kids who are very good at selling their experience and creating a mystic of you need me. They have landed at very good firms that would normally be out of the ballpark for them.
I saw a similar article from a few years back that was in Institutional Investor. It sounds like a pretty hardcore place. I am sad it's on the rocks, though, because it's hard to find a good mix of experience, investment style, and location. I guess I'll target Oaktree...
Are you hoping to land at a big, institutional firm?
In my interviews with HLHZ LA I met several analyst who were either going to Oaktree or knew of previous analyst who have gone to Oaktree.
i imagine you could also come from a restructuring consulting group like A&M / Alix/ FTI
Restructuring at the Big 4 are booming atm too
The guy who runs Oaktree, Howard Marks, is legit. His memos show a very good understanding of financial markets and the investment process: http://www.oaktreecapital.com/memo.aspx
Seems like a good place to start.
MBA to HF - best route? (Originally Posted: 06/28/2011)
Snip
bump.
I think you are going to find the vast majority of people on this board are younger than you and less experienced (myself included). A top 5 MBA and a CFA Charter are going to be well respected just about anywhere, so don't feel "under-credentialed", the only thing an investment banking analyst is going to have over you is most likely better financial modeling skills.
In the mean time, if you are interested in the value side of things, check out valueinvestorsclub.com and sign up for guest access. The write ups are done by real buy-side professionals. You can get a look at how these people think and make investment decisions. Join the usual clubs, do the alumni networking etc. Find the reading lists that Klarman/Greenblatt/Loeb/Einhorn/etc have put out there, most of the titles overlap. If you have a natural affinity for these things, do well in your program, and can land some interviews, I don't see why you couldn't land at a hedge fund straight out of business school.
Best of luck, hopefully someone that has been on the buy-side much longer can offer a more informed opinion.
I honestly think if you join the clubs mentioned above, read all VI related books, and actually keep and maintain your own P&L with 5-10k you should be just fine. Learn everything about the funds you'll interview with and you should be okay.
Guys -- thanks for the advice. Regarding getting my own P&L going, where do you guys start? Do you have screens you set up for certain characteristics and research further into the most promising? Do you look for special situations (probably the most interesting and enticing style of investing for me, but also the most difficult to screen for)? Any tips?
That's a very good question. Usually, I set up screens and evaluate from there. However, if any one on this board can tell where to find special situations type securities easily, that would be great.
There are a few ways to find special situations. I will focus on spin-offs here because I think that a great place to start for an investor trying to allocate their PA.
There are a number of ways to do this:
Get yourself on a bloomberg terminal. Those guys have codified a lot of the main types of events. For example if you search for "NI SPN" they will show you all scrolling news related to spinoffs.
Search for companies filing Form 10-12B which is done to register securities resulting from spinoffs. Just click this link: http://www.sec.gov/cgi-bin/srch-edgar?text=form-type+%3D+10-12b+OR+form…
Set up a Google News alert. I have a Gmail account where I let my Google Alerts accumulate. Once in a while (every few weeks) I go on and go through it to find anything I may have missed.
Setting up a research pipeline now will help you loads in the future. There are well known value investors who look at the 52-week low list to find opportunities. Others who use quantitative screens (check out the Empirical Finance Blog). Others use HF filings. Others follow macro events to find value (look at japanese securities post earthquake etc).
Get into a habit of reading: everything from annual reports to sell side reports to primers on investment strategy (quant/value...everything). Investors are professional readers who just happen to allocate money. There is a reason why Buffett wished for faster reading as the superpower he would love to have.
Best path to HF (Originally Posted: 05/08/2012)
So what's the best career path to land you a job at a hf?
Yes yes I know .. Search function. But I would like to know what the most up to date path would be.
Thanks.
like any buy side firm. Work on sell side first.
I'm sure you're aware that there are many paths, some traditional and direct, others not so much. However it also depends on what type of position you want at the hf. There are distinctly different paths to be a trader vs. an analyst at an hf.
For an analyst, traditionally you'd go through a 2 year analyst stint at an investment bank and learn the foundational skills necessary to do investment origination and research on the buyside. However if you know what you want and meet the right people it's possible to skip investment banking and go straight to an hf. The latter is much more difficult and will require you to learn on your own without any real formal training.
Since I'm only an analyst/intern still in school I'm not familiar with the process of becoming a trader at an hf. I know it requires you to build up a decent track record beforehand though.
The best people I know in the field get MA's or PHD's in finance, econ, physics/math/engineering, though the more straight away route is to go through banking.
Hold up guys, there's been an update on the best career path to get a HF job. Turns out you have to...
Seriously? Just look at people's career paths on Linkedin. Beyond IBD being a big feeder to valuation-based funds and S&T towards trading-oriented funds (macro, RV...), there is a ton of variability out there and there will never be a "best path."
Start by focusing on a strategy you're interested in, then figure out what kind of background people at those funds have.
If you're completely agnostic to the sorts of funds you're going after, top tier banking is probably the best bet across a variety of strategies. This is because a large percentage of managers come out of those sorts of banking programs and are, therefore, comfortable with the specific sorts of competencies that you acquire as a banker.
That said, plenty of funds demand a bit of a different skill set. I came in from am MBB background which complements my fund's research style. I would imagine that distressed funds want someone with a strong credit or legal background, that macro funds would be open to economists, that quant funds would prefer computer scientists, etc.
It's a somewhat difficult thing to characterize on the whole.
Can anybody shed some light on the possibility of transitioning from physical commodity trading to an energy/commodity based hedge fund?
Its called an Ivy League education or MBA from top 10 Ivy school.
Easiest way in. In todays world most hedge funds only take analysts from those schools.
The sad truth.
This is like asking "What's the best path to becoming a pro athlete?" It depends on the sport you want to pursue, and in HF, the same is true. I echo previous posters' sentiments; find a strategy you're interested in and go from there. Skills needed for equity L/S differ greatly from skills needed to write algorithms for HFT, which differ greatly from skills needed for macro, so on and so forth.
My Path to Hedge Fund? (Originally Posted: 01/20/2014)
Hi.
I am very interested in market/equity research & investing myself.
I am not sure my plan could eventually lead me to break into hedge fund.
Let me briefly introduce myself,
I hold bachelor in Electrical Engineering from public ivy (graduated with distinction), master's in Computer Engineering from top 5 engineering school with minor in economics.
I am currently working @ one of top high tech firms. (e.g. Apple, Google, MS, you name it)
Currently involve in Investment Organization, I am an active investor myself as well.
SO!! I am planning to go to top10 mba to study finance with a hope to break into either ER or IB, especially focused @ tech sector. (As an engineer myself, I know & love TECH!)
After few years of ER or IB experience, I am looking forward to taking transition to HF.
Is there any better option/route to my goal?
Or at least, is my plan just a dream or a plausible solution?
Any opinion is welcome!!!!!!
What is a "public ivy"?
Penn State Uni of virginia UNC Chapel Hill Uni of Texas Austin
According to LinkedIn in this case it means Michigan. With a Master's degree from Georgia Tech.
Have you heard of a quantitative developer? I'm not sure if your looking to be a technical guy at a HF, but quant developers can make up to 500k with a chance of trainsitioning to a trading role if your exceptional. Top 5 MBA is however, a much safer route.
.... people really need to learn to stop using their names as ids.
"Public Ivies" are like "Semi-targets": Not Real
Either a school is an Ivy or it isn't. Either your school is a target or it isn't.
Your background and experience will definitely put you in contention for top-10 level MBA programs and potential feeds into IB/ER. The tech background from both industry and school will be very helpful from an industry group / research coverage perspective and should help you get some looks. It'll also give you a good story to tell as to why IBD - very easy to spin. All in all, you look like you have a solid background and should be able to progress to your goal in the next few years going forward.
And change your account username. Very easy to track who you are. You are either a software engineer or a South Korean professional football player.
Thanks for your advice. No worry thou. I am neither one of them :)
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